ANALYSIS OF DETERMINANTS OF ELECTRICITY THEFT IN NIGERIA

Abstract

The challenge of electricity theft has continuously contributed to unreliable electricity supply and undermined the financial viability of the electricity sector in Nigeria. This study examines the determinants of electricity theft across eleven electricity distribution companies from 2017 quarter 3 to 2024 quarter 3, using a fixed-effect panel model. The findings show that all variables in the analysis are significant determinants of electricity theft, except the metering rate. An increase in the actual price of electricity, the population of registered electricity consumers, and the previous rate of electricity losses exert positive and significant effects on electricity theft. The impact of electricity price was particularly pronounced, with a coefficient of 93.87, indicating that tariff increases without commensurate improvements in service reliability directly exacerbate theft. Conversely, improvements in the quality of electricity supply and revenue collection marginally reduce electricity theft. The study recommends that the Nigerian Electricity Regulatory Commission (NERC) mandate targeted infrastructure investments by DISCOs to enhance supply reliability, while DISCOs’ management, fully digitalize payment channels to eliminate cash transactions and improve revenue collection efficiency. These strategies are expected to mitigate electricity theft, enhance service delivery, and strengthen sector financial viability.